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In an interview with CNBC-TV18, TS Harihar of ICICI Securities, spoke about his reading of the market and the road ahead.

Below is an edited transcript of his interview on CNBC-TV18. Also watch the attached video.

Q: How is the F&O market looking right now?

A: We are seeing sharp reduction in the open interest. The Nifty open interest is down about 17% month-on-month. In stocks like Infosys, TCS—open interest is down about 42% and 38% over the last quarter.

This indicates two things. A lot of the foreign institutions, who had a position on the index, that is the Nifty futures, they were unwinding these positions on GAAR concerns. At the same time there is unwillingness to take a fresh position. These two things combined seem to be responsible for the fall in open interest, which is roughly at a two or two-and-a-half year low at this point in time.

This broadly indicates towards a rangebound market and lack of any fresh direction in the absence of any cues coming either from the domestic or the global macro.

Q: The bank Nifty has not done too badly over the last couple of days. How would you approach trading in that one now?

A: We need to remember that while the Nifty Index has been shedding open interest, Bank Nifty is actually seeing open interest addition. That seems to be led by a couple of factors.

Stocks like Axis, ICICI and SBI seem to be pretty close to their support. That is resulting in two things. Last week, we saw shorts getting covered and this week we have seen some fresh longs getting built up. In the very short-term, I would believe that another 5% to 6% upside on the Bank Nifty could be expected purely on technical grounds.

Q: Any positions you are seeing on IT ahead of Infosys tomorrow?

A: The fall in open interest on TCS and on Infosys has been between 38% and 42%, which is very surprising and normally does not happen ahead of the results. Earlier, there used to be a long-short—long on Infosys, TCS and short on Wipro and HCL.

In the last one-month, we have seen the company unwind of this trade, which means short covering on HCL Tech and Wipro and long unwinding on Infosys and TCS. So any further course of action, we may probably get to see only after the results are out tomorrow.